RETAIL PRODUCE PROFILE
Hannaford Bros.’
Organic Experiment
At its Lowell, MA, store, Hannaford practices ‘Sectional Segregation’
by placing organic display points within 26 product groupings.
By Dave Diver
Former vice president of
produce at Hannaford and
a regular columnist for
PRODUCE BUSINESS.
The buzz from consumers who have
visited the recently opened Hannaford store in Lowell, MA, told me it
was something different from their
local grocery shopping experiences in
the area.
As I approached the store with its “New Store
Opening Celebration” banner draped above the
entrance, my feeling of anticipation grew. I felt
almost like a child approaching presents under the
tree at Christmas. What would I find? Would one be
a cellular phone that performed only basic voice
communication? Or would it be the latest upgrade
with all the bells and whistles putting me on the
cutting edge?
I have been in several of Hannaford stores that
represent the generation developed in 1999, and
the produce department design and implementation have been impressive. How could that be
improved? As I stepped through the front door, my
initial glance revealed a strikingly similar overall
appearance, including the signature tree at the
department center.
However, there were differences, and they
required some close observation to identify. Fortunately Will Wedge, corporate produce director, and
Mike Albain, store produce manager, were there to
conduct a guided tour.
After walking the department, I realized that
while the layout looked similar to the previous generation, the feel from a customer’s perspective was
entirely different. Wedge and Albain explained that
table heights had been altered and wall case heights
increased. The overall display created a stronger
visual effect for the fresh product.
S E C T I O N A L S E G R E G AT I O N
As we toured the department, it quickly became
evident that organic product was being displayed
differently, with multiple point-of-sale materials to
attract the consumers’ attention. Case channel
strips, 81⁄2x11-inch cards and specially designed case
dividers highlighted the product spread throughout.
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PRODUCE BUSINESS
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AUGUST 2006
In the citrus section, there is space in the
center devoted to the respective organic
items. The same may be said for all 26 product groupings spread throughout the department. Each of the organic display points is
identified as a signature group within the
department plan.
Making it easier for
the consumers and
offering more
healthful food
alternatives provide
an awareness of the
company’s commitment to organic,
which should not only
grow the category
but also increase
overall produce and
store sales.
According to Wedge, Hannaford views
organics as a signature category, which
means focusing on exceeding consumer
variety expectations and offering unsurpassed quality. Other signature categories
include tropicals, tomatoes, mushrooms,
peppers and herbs. The organic category
provides a point of differentiation as a destination for the current 23 percent core, 64
percent occasional and 13 percent dabbler
organic shoppers. The goal is to increase the
transition of the occasional into core organic
customers.
Customers cannot help but be introduced to organics whenever they shop a
section. The total organic shopping customers are going to be drawn to all sections
of the department depending on what they
have on their shopping list. Making it easier
for the consumers and offering more healthful food alternatives provide an awareness
of the company’s commitment to organic,
which should not only grow the category
but also increase overall produce and store
sales, according to Wedge.
What prompted Wedge to settle on this
integrated approach and is integration being
followed in the company’s other produce
departments?
30
PRODUCE BUSINESS
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AUGUST 2006
When Wedge became director of produce
nearly a year ago, he had the advantage of
being involved with merchandising organic
products in other areas. As a center-store
category manager, he purchased items such
as organic baby food and growth-hormonefree milk. When he came into produce, he
knew consumers were becoming more educated on healthful food consumption
options. “Organic produce denotes attributes
such as safe, value-added, pure, better tasting, fresh, more nutritious, better health and
environmentally friendly,” he adds.
Consequently, he set out to read all the
material available about organic produce.
He found the company’s experience with
organics was similar to that of the conventional supermarket chain, but it was not
achieving the growth that appeared to be
occurring in the overall market for organics.
Reportedly 48 percent of organic shoppers
buy in traditional supermarkets, 18 percent
in specific organic markets, 15 percent in
super centers and 15 percent between farmers markets and large health-food stores.
Most importantly, he found organic produce customers are 12 times more likely to
purchase organic and natural products in
other departments within a supermarket.
The three largest growth segments are parents mindful of healthful food consumption,
people with health-related issues, and people with strong natural lifestyles. Organics
had recently reached what might be called a
critical mass.
As Wedge’s investigation progressed, he
discovered a recent consumer survey
revealing sectional segregation; grouping
like commodities was determined to be
more popular than full integration or full
segregation. He found sectional segregation
gives consumers an easier shopping experience, encourages produce managers to provide a wider selection of SKUs on a daily
basis and piques the interest of occasional
and dabbler shoppers.
Consumer feedback to the integration
has been three quarters positive with the
balance mixed. These comments focus on
the ease of shopping, and as a result, sales
of organic product are far greater than prior
to implementing the program throughout
the company.
According to Wedge, the research was
just the beginning. He turned an outline for
the integrated concept over to other members of the corporate produce team to adapt
and implement in five test stores. Merchan-
cent Nature’s Place department, the
store-within-a-store concept focused
on organic and natural foods, soon
emerged. Michelle Ham, design specialist for Hannaford, and the rest of
the internal marketing department
completed the new design work.
VENDOR
PA R T N E R S H I P S
Current vendor partners, Procacci Brothers, Philadelphia, PA, and
Albert’s Organics distribution center,
Chesterfield, NH, have been particularly helpful in supplying product to
grow the category. Hannaford is
now recognized as serious about the
Exotic fruit is one of the signature categories
business because it has needs for
at the Lowell Hannaford store.
pallet-sized quantities of many items, a windiser Don Ducharme became the key archi- win for everyone. “To have a successful
tect of bringing the program to reality with organic produce program, it is vital to have
substantial assistance from organic category the right dedicated collaborative partnermanager Mark Jewell and organic buyer ships regardless of how you elect to merMark Rock. During the test phase, they chandise the organic product,” Wedge
admit many within the company held vary- emphasizes.
Representatives of both companies
ing degrees of skepticism about its viability.
Creating a successful program required a emphasize they have partnered with Hannumber of elements. Originally, a generic naford in developing the distribution propoint-of-sale package was utilized, but a need gram for over a hundred fresh organic
to connect organics in produce with the adja- items. The strong Hannaford commitment
of doing rather than just talking about a program has led to a relative volume explosion
since the integrated program was intro-
“To have a successful
organic produce
program, it is vital
to have the right
dedicated collaborative partnerships
regardless of how you
elect to merchandise
the organic product.”
— Will Wedge
Hannaford
duced throughout the company. This additional volume has enabled them to be more
price competitive, especially since they
know Hannaford has the capability of react-
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PRODUCE BUSINESS
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AUGUST 2006
ing when supplies of individual items
increase substantially.
A S S O C I AT E E D U C AT I O N
Perhaps the most important element for
the company-wide rollout was store associate education. Prior to the rollout, all associates viewed a webcast program that presented the strategy and details necessary to
implement the program. At the same time,
associates were able to ask questions and
receive immediate answers. This adaptation
of today’s technology is a wonderful example of how Hannaford is condensing its
communications world in a manner similar
to Thomas Friedman’s discussion of globalization in his must-read book. The World Is
Flat, published in 2005.
Projections are for produce organics to
reach 5 percent of total produce sales by
2007. While the supply of most organic
items is increasing as larger producers continue entering the field, the increase in
demand is helping mitigate price declines
that might otherwise have been expected.
The development of smaller pack sizes has
lead to improved store level turnover, bringing with it an improved level of freshness
Knowing
Will Wedge
S
ince Will Wedge has not spent extensive time as a produce director, many
reading this article probably have little
knowledge of Hannaford’s 40-something
director of produce. But his approximate
year in the position illustrates that he understands his qualified team and uses his
expertise to enhance their performance. He
has used experience gained from being a
store manager, produce training specialist,
center-store category manager and regional
merchandiser to analyze and develop integrated programs effective within the store
operation and attractive to consumers.
His preparation base actually goes much
deeper. Born at approximately the same
time his father was killed over Vietnam, he
grew up in the paper mill town of
Millinocket, ME, within sight of Mount
Katahdin. He started as a part-timer in the
local Hannaford store, a job he continued
while in college. After completing a 5-year
stint in the Air Force, he returned to Maine,
became a store manager and obtained his
MBA.
Wedge, a proud husband for 20 years
and the father of two teenage girls, has been
known to run marathons and compete in
triathlons. Now he is part of a management
team racing to stay ahead of all competitors, Wal-Mart included.
Customers will eventually determine the
winner of this race. You will want to know
the man competing.
pb
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for consumers. Combining this with a realistic accrual for projecting potential shrink
has helped create a positive mindset among
store produce managers. After all, they are
the ones who implement the final program.
34
OTHER PROGRAMS
Organics is not the only new program
PRODUCE BUSINESS
•
AUGUST 2006
Promoting locally grown produce attracts consumers interested in
freshness and helping local farmers.
implementation for attracting customers.
Each year, locally grown produce attracts
greater attention. One challenge is a uniform definition for all stores so consumers
understand what is being offered. Hannaford
decided an item could be identified as locally grown only if it were grown in a store’s
respective state. For those stores in close
proximity to a state line, the produce from a
neighboring state could be identified with
grower and growing location. While technically those items are not displayed as locally
grown, in many instances consumers recognize the location and particularly the grower’s name.
Along with special signing and advertising to highlight the program, special caps
with “Locally Grown” insignia have been
given to store associates. Numerous meetings were held with more than a hundred
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local store produce managers. Due to a late
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in June, locally grown variety was limited
during my visit, but the outlook is for the
best season ever, with consumers being
assured they are receiving true locally
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PRODUCE BUSINESS
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and retailers to gain consumer attention for
charitable giving.
The three programs — organic, locally
grown and Children’s Miracle Network hospitals — combine to create an emotional
connection to what many people value. This
is occurring at a time when marketers of
leading products are focusing their national
advertising programs on emotional themes.
Fresh-cut fruit has been both a challenge
and an opportunity for many retail produce
operations. Hannaford has chosen to partner with Del Monte Fresh Produce, Coral
Gables, FL, for its fresh fruit delivered in
safety-sealed consumer containers and completely labeled on the bottom of each package with ingredients, country of origin,
weight, bar code, use by date, lot number,
recommended storage temperature and an
address and phone number for Del Monte.
As a result, the expanded 12-foot display
section is kept well stocked and sales are
increasing. Not leaving anything to chance,
a special label focusing on the word “fresh”
was designed for the top of the package
where the customers see it immediately.
When all these programs are combined,
they become an example of an overall program of integration making the Hannaford
produce departments an exciting place for
both consumers to shop and associates to
work. The founders who started Hannaford
Bros. Company by selling fresh fruit and
vegetables from a truck in the late 1800s
would be proud of how the company keeps
evolving.
pb